Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

Question

Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

(a) Cash Credit Ratio

(b) Debt Service Obligation

(c) Liquidity Adjustment Facility

(d) Statutory Liquidity Ratio

Monjur Alahi

4 views

2025-01-04 04:42

1 Answers

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Salim Ahmed Kawsar · Accepted Answer · 2023-02-05T15:29:48+06:00

(c) A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangement allows banks to respond to liquidity pressures and is used by governments to bring stability in the financial markets. RBI started the scheme in 2000 and conducts daily auctions to inject and withdraw liquidity from the market.